The BHP Group Ltd (ASX: BHP) share price has been a positive performer on Wednesday.
At the time of writing, the mining giant’s shares are up 2.5% to $54.37.
This leaves the BHP share price trading within touching distance of its record high of $54.55.
Why is the BHP share price pushing higher?
Today’s gain by the BHP share price may have been driven by a rise in the iron ore price overnight.
According to CommSec, the spot iron ore price lifted by 0.4% to US$184.15 a tonne overnight. While this is only a small gain, it is the second day in a row that the price of the steel making ingredient has increased after some sizeable declines late last week.
This appears to have eased investor nerves that a significant correction was coming for the iron ore price.
What else is boosting its shares?
Also giving the BHP share price a lift recently has been speculation that the company is looking to offload its petroleum business.
Analysts at Ord Minnett are positive on the potential move and not just for ESG reasons.
It notes that the petroleum business consumes a disproportionate share of capital expenditure. As such, if it can get a fair valuation, it believes an exit would make strategic sense.
A note out of Morgan Stanley reveals that its analysts feel mixed about the speculation and see both positives and negatives from it.
They commented: “Although we think that a fossil fuel exit could enhance the company’s investment case and ESG credentials, the company’s management has consistently commented on the attractiveness of the O&G business and its willingness to continue to invest in O&G opportunities to improve the division’s returns.”
Is it too late to invest?
The team at Ord Minnett don’t believe it is too late to invest. According to a note, the broker has retained its buy rating and $60.00 price target on its shares.
Based on the current BHP share price, this implies potential upside of 10% over the next 12 months before dividends.
And with Ord Minnett expecting BHP to declare very generous dividends over the next 12 months, the total potential return is predicted to stretch beyond 16%.